Financial Markets in Development, and the Development of Financial Markets

What is the relationship between markets and development? It is argued that markets promote growth, and that growth in turn encourages the formation of markets. Two models with endogenous market formation are presented to analyze this issue. The first examines the role that financial markets - banks and stock markets - play in allocating funds to the highest valued use in the economic system. It is shown that intermediation will arise under weak conditions. The second focuses on the role that markets play in supporting specialization in economic activity. The consequences of perfect competition in market formation are highlighted.

• Publication year

  1997

• Venue

  Journal of Economic Dynamics and Control

• Publication date

  Unknown publication date

• Fields of study

  Economics

• Identifiers
  DOI 10.1016/0165-1889(95)00928-0
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

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